February 1, 2018 / 9:04 AM / 3 months ago

ASIA CREDIT CLOSE: Asian credits firmer; AMCs bonds widen on new supply

HONG KONG, Feb 1 (IFR) - Asian credits were firmer on Thursday, recouping some losses from earlier this week.

Investment-grade credits in general were 2bp-3bp tighter. However, investors remained cautious amid rising US interest rates and Treasury yields, a Hong Kong-based trader said.

The US Federal Reserve, as widely expected, kept interest rates unchanged overnight and said inflation is likely to quicken this year.

The hawkish tone of the FOMC statement reinforced expectations for a March rise and raised the possibility of four rather than three increases as the base-case scenario for 2018.

The iTraxx Asia ex-Japan investment-grade index was around 1bp tighter at 63.60bp/64.35bp.

Although market sentiment has improved, bonds from Chinese asset management companies have widened 1bp-2bp on new supply, the trader said.

China Cinda Asset Management is marketing four-tranche US dollar senior unsecured notes, with a market source saying the issue size may be over US$3bn.

Bonds of state-owned Qingdao City Construction Investment (Group) and Qingdao Conson Development were wider by 1bp-2bp after S&P yesterday revised their rating outlooks to negative from stable.

Both companies are rated BBB by S&P. The agency said the rating actions reflect its view on the credit profile of the Qingdao government, which is “constrained by the city’s weak budgetary performance and very high debt burden”.

Meanwhile, Zhongtai International’s US$200m 4.10% 364-day notes, priced at par last night, were hovering at reoffer.

Noble Group’s bonds saw some profit-taking after the recent jump. Both its 6.75% 2020s and 8.75% 2022s were down about 4 points to 52.

Reporting by Carol Chan; Editing by Vincent Baby

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